A utility valuation is one of the most important investments that municipalities and other utility providers can make to maximize the value of their assets. Whether a sale is being considered or not, it is responsible to understand the current value of your infrastructure. However, it is a niche service with few companies specializing in this area and few utilities investing in it until they are under the wire for a sale. Our colleagues at Walden Environmental Engineering have become experts in performing utility valuation studies and have become our go-to resource for this service.
Although a utility valuation may not be something a municipality seeks out on a regular basis, completing the process has multiple benefits. Walden created a guide for maximizing utility asset value, which includes a comprehensive look at the benefits of utility valuation.
Determining Fair Market Value
While most people may have a general sense of the market value of a home or business, applying accurate values to a utility is much more nuanced. Prices change across markets as one could expect, but decades of adding to these systems makes things more complicated. It’s not uncommon for municipalities and private owners to lose track of assets sprawling across a cityscape or rural area.
Ultimately, cities, towns, and utilities tasked with building, buying or selling an asset for their drinking water, sanitary sewer or other utility system may realize they have no basis of comparison when it comes to applying a fair market value to these assets.
Saleability and Minimizing Risk
Utility valuation can make or break a sale, by either attracting buyers or in passing regulatory scrutiny. Often the process of assigning value to utility assets uncovers forgotten or unlisted assets, making the utility more attractive and investment decisions more strategic.
An inaccurate sale price could mean beginning a transaction only to have regulatory agencies stop it in its tracks due to an inappropriate market value.
Ensuring the Best Deal
Utility valuation is a very specific type of work with few understanding the evolving regulatory environment that impacts it. It is inevitable that utility valuation will become a standard practice for municipalities, but for now it can actually offer a competitive advantage in having an exact value. Municipalities and private owners can take steps to further increase their asset’s value using information from the study.
Understanding the process and what to expect from it is the first step toward seeing a utility achieve the greatest possible value for their constituents, residents and ratepayers. For more information on utility valuation services, visit Walden’s website and download their comprehensive guide.